A Rough Q2 for Juniper

For Juniper Networks (NASDAQ:JNPR, news, filings), the second quarter apparently had more than the usual crop of speed bumps.  In the list of things one doesn’t generally want to read in an earnings release, Juniper saw ‘mixed signals from the macro economy’, ‘moderation in certain areas of the business’, and responded by taking ‘decisive steps to ensure our cost structure takes into account the near-term revenue environment’.  Here’s a quick rundown of their numbers on context.

$ in millions	Q1/10	Q2/10	Q3/10	Q4/10	Q1/11	Q2/11	Q3/11 (guidance)
Revenue	$912.6	$978.3	$1012.4	$1190	$1102	$1120.5	$1070-1120
EPS (non-GAAP)	0.27	0.30	$0.32	$0.42	$0.32	$0.31	$0.26-0.30
Operating Margin (non-GAAP)	23.2%	23.9%	24.1%	24.5%	22.3%	22-23%	19-21%

Revenues of $1120.5M missed guidance of $1130-1180, non-GAAP earnings per share was light at $0.31, and operating margin was below expectations.  Guidance for Q3 was not even close to the composite analyst estimates of $1.22B in revenue and earnings of $0.38 per share.  As one might expect, the company’s stock is down 15% or so after hours – though we’ll see what the real fallout is in the morning.

Some of this is due to the timing of the company’s new QFabric release, which some posit has led the delay of some purchases while they fill out the offering across the necessary product lines.  Some of it is just due to the volatility of the telecommunications equipment space, which can turn on a dime and then do it again a month later.  But it seems clear that with Cisco reeling and bandwidth growth unrelenting, the overall environment should be healthy enough for Juniper to turn it around quickly.

That all assumes of course that the economy doesn’t melt down first while Congress gets carried away playing its hot air guitar – but then we’ll have bigger problems to worry about anyway.

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Categories: Financials · Telecom Equipment